Business Notes — Human Resources

Role of human resource management

● strategic role of human resources

Human resource management - the management of the total relationship between an employer and
employee.

Strategic role of HRM: A strategic approach to acquire, develop, maintain and separate employees to
create a highly effective HR package in order to meet the business’s labour needs and achieve
business objectives
- sees an employee as an asset rather than a cost
- encourages open communication and goal orientation
- accepts that legitimate differences exist → aims to reduce conflict → effective procedures and
relationships

Staff costs about 60% of operational costs → manage employees by:

- effective workforce = way of adding value to all areas of their business performance
- focusing on the use of specific human resource management strategies to retain, reward and
motivate effective and skilled employees to achieve the business’s objectives

Major strategic challenges for HRM:

- developing and retaining talented staff
- improving leadership development
- managing an ageing workforce
- the increased role of technology
- ethics and corporate social responsibility
- increased contracting out (outsourcing) of employment

● interdependence with other key business functions

HR and finance
- effective human resource policy = profitability gains, share price increases and higher
incidence of long- term survival
- Finance impacts the funds allocated towards training and development (TD), workplace
education issues, OHS, remuneration
HR and marketing
- Creating stronger relationships between the business and its customers → appeal to the
business image as promoted by marketing

HR and operations
- Operations sets a criteria with all the skills/attributes needed by an employee
- Stronger relationship between employer and employee = better performance by employees
(productivity and efficiency)
- Level of service experienced by customer is likely to be positive and generate customer
loyalty (competitive advantage)

● outsourcing

Outsourcing - the use of third-party specialist businesses, for example, recruitment firms
➔ It aims to take advantage of the specialist skills provided by them (superior service and
better functional quality) and to achieve a reduction in labour costs
➔ Offshore (global subcontracting) and onshore outsourcing
➔ Major areas: property and facilities management, financial processes, administration
support services, internal auditing, call centres, maintenance. HR functions

- human resource functions

Outsourcing HR functions enables business to focus on its core activities whilst experts assist by
planning growth, development and management of staff during this phase.

- using contractors – domestic, global

Contractor - an external provider of services to a business (may be an individual or a business)

● create costs savings or to access greater expertise and capabilities to improve

competitiveness
● particularly used for processing functions (repetitive and easily measures → easy to
determine the cost savings and productivity gains)
● disadvantages include: cost overruns (or cost increase), loss of quality, difficulty
coordinating activities, and difficulty monitoring quality and performance
 ● by setting clear and legally binding terms, timeframes and conditions in a contractor
agreement allows a business to avoid conflict and expensive litigation further down the track
(includes superannuation, insurance, worker’s compensation)

DOMESTIC SUBCONTRACTING

Business employs additional ‘in-house’ staff to focus their resources on essential business activities

Advantages Disadvantages

- Avoids the need to employ additional ‘in-house’ staff - Limits the talent
(overhead expenses involved) pool/potential
- Allows firms to focus their resources on essential contractors
business activities, - No control over
- Fresh ideas and perspectives such as leadership quality/productivity off
development the work done
- Flexible - variation in demand - No appreciation of
- Cheaper than full time staff business culture - lack
- Potential to improve quality and productivity of the of motivation or
service commitment
- Attractive to SME due to their lack of capacity to audit,
research, compliance updates at professional best
practice of larger firms

GLOBAL SUBCONTRACTING

Under pressure from global competition, many businesses offshore contractors to reduce costs
whilst using it as a first step to begin operating in new markets overseas to get more acquainted
with market needs before expanding with greater physical presence.

2 forms of outsourcing:
1. Process outsourcing: dominant form of outsourcing of repetitive, easily measured and
documented work
2. Project outsourcing: commonly found in areas such as human resources, marketing, design,
information technology (IT) and research. It involves much greater use of intellectual
property and strategic business knowledge; operating in a longer time frame, is more
difficult to measure and the quality cannot be fully anticipated, thus carrying more ris

Potential advantages Potential disadvantages

● Expand capacity/ ● Less integrated organisation

 flexibility ● Difficulty controlling the quality and reliability of the
● Improve quality service
● Save costs ● cultural differences e.g. language or accent issues,
● Access new networks which may impact on customer service
● Conserve capital ● Costs may increase → hidden costs
● Help in managing complex ● Damaged morale and motivation
issues ● Less face-to-face client contact
● Transform culture ● Reduce business learning through reliance on experts
● Improve legal compliance ● Loss of security and confidentiality of information
● Train staff ● lack of remedies for breach of contract and legal
● Access experts, by matters under foreign legal systems
practice management ● well-qualified employees may be replaced by less
systems and research qualified staff, causing the quality of the service to
decline

Key influences

● stakeholders – employers, employees, employer associations, unions,

government organisations, society

Stakeholders - any individual or group that has a common interest in or is affected by the actions of
an organisation

EMPLOYERS
Employers - Those who exercise control over employees, have responsibility for the payment of wages
and/or salaries and have the power to dismiss employees
- Handle HR management on a daily basis → negotiate agreements and resolve disputes at the
individual workplace

EMPLOYEES
Employees - workers under the control of an employer
- Control includes the workplace location, the way that the work is to be performed and the
extent to which supervision will be exercised
- Churning (moving frequently from one job to another in different organisations) is
increasing, particularly in service industries as employees no longer trust one business to
look after their needs
- Seeks work–life balance
 - Retain and motivate skilled staff by putting extra effort into developing staff career and
training plans, rewards and opportunities for greater employee involvement

EMPLOYER ASSOCIATIONS
Employer associations - organisations that represent and assist employer groups
- Respondents to the awards covering the employees of their members, and covering
employers in the same or related industry
- Represent employers in the making of awards through the conciliation and arbitration
system established in 1904 (also beyond HR matters)
- Assist in formulating policies and processed logs of claims (list of demands on specific wages
and conditions made by workers, often through their union against their employers)
- Main roles:
- provide advice (especially to small businesses) on such matters as awards, unfair
dismissals and discrimination issues
- make submissions to safety net wage cases
- negotiate agreements
- lobby governments and other organisations with the views and interests of
employers, industries and trade

UNIONS
Trade unions - organisations formed by employees in an industry, trade or occupation to represent
them in efforts to improve wages and the working conditions of their members
- System for resolving industrial disputes, established in 1904 in Australia
- Membership is currently declining as they have contributed to winning so much employee
rights over the last decades
- High in education and training and low in professional, scientific technical services
- Range of services to regain membership numbers include free or discounted legal services,
superannuation schemes, cheap home loans, training programs through TAFE, insurance,
cheap holiday units to rent, income protection against illness or accident, occupational
health and safety advice etc.

GOVERNMENT ORGANISATIONS

Key roles in the industrial relations system:

 - Legislator: elected representatives pass laws in parliaments which provide the legal
framework for industrial relation → led to the growth of the judicial system, and the
institutions and processes to conduct bargaining and resolve disputes
- Employer: employs ⅓ of Australian workers and pacesetters in terms of responsible
industrial relations policies, having introduced practices such as maternity leave, flexitime
and affirmative action for women that were eventually adopted in the private sector
- Responsible economic manager: keen to ensure non-inflationary, stable economic growth
and a high standard of living for all Australians → conflict between governments’ economic
goals, which impact on industrial relations
- Administrator of government policies on industrial relations: able to implement the
legislation they enact by publishing information and guidelines providing advice to the
government and the public and investigating breaches of legislation
- Representative of Australia in the international arena, in foreign affairs, trade and
international labour matters: Australia is a foundation member of the International Labour
Organization and the government generally implements legislation based on the treaties and
conventions it signs with international organisations (e.g. social justice legislation passed in
relation to discrimination, and human rights)
- Recent government policy has focused on reducing the powers of industrial tribunals and
encouraging decentralised bargaining in the workplace
- Since the introduction of Fair Work Australia Act, all states except WA referred their
industrial relations powers to the Commonwealth → aimed to simplify industrial relations
and to stop employees and unions from ‘shopping around for the best deal’ → reduce
business costs through creating greater certainty and efficiency in dealing with industrial
matters

Statutes - laws made by federal and state parliaments

Provide the framework for awards and agreements, and the resolution of disputes and require
employers to:
- meet work health and safety requirements
- maintain workers’ compensation insurance
- provide all employees with superannuation, annual leave and long-service leave
- ensure employment practices in the workplace are free from discrimination
 - give each new employee, covered by the national industrial relations system, a Fair Work
Information Statement → provides basic information about employee rights.

Australia has shifted from a dual federal and state industrial relations system to a national
industrial relations framework. Implemented under the Fair Work Act 2009, it covers all
constitutional corporations and private employees (except WA)

Constitutional corporation: under section 51 of the Constitution of Australia — identified as foreign

corporations and trading or financial corporations formed within the limits of the Commonwealth

Key elements of the framework:

- 10 National Employment Standards (NES) developed to provide basic protections to
employees
- collective bargaining and good faith bargaining required by all parties
- modern awards for specific industries and occupations
- enterprise bargaining continued
- annual National Wage Case sets minimum wage
- protection from unfair dismissal

Industrial tribunals and courts exist at the federal and state levels to enforce laws established by
governments → Fair Work Commission ensures bargaining process is according to law

- Primary functions: settling disputes through conciliation, supervising the making of

agreements or awards and award simplification, hearing appeals and handling unfair
dismissal cases
- Through hearings and functions, FWC determines questions about future rights of
employees and employers
- Panel of 7 members is responsible setting minimum wages for employees yearly

Federal Court of Australia is a judicial court (has judicial powers to determine disputes whereby it
can interpret and apply laws)
- handles cases relating to industrial action and breaches of industrial laws
- has power to approve the disamalgamation (splitting up) of unions
- Interprets industrial legislations
- Impose penalties of a breach of an award or order, and discrimination cases

SOCIETY
Employers and employees can make their views clearly known through votes and change
legislation in Australia

Global competition → increased pressure on business to become leaner

- businesses want to offshore production
- use contactors and work longer hours to reduce costs
- Rationalisation of production
- Need for efficient operations

Community demands for safety and wellbeing at work

- eliminate discrimination against female, Indigenous and disabled members
- safety and wellbeing at work

● legal – the current legal framework

Society has shifted from a strongly centralised industrial relations system from the 1980s
(collectivist approach in which disputes are referred to industrial tribunals) to a decentralised and
more fragmented system today (employers and employees negotiate wages and working conditions
in the individual workplace, through collective or individual bargaining and without the
involvement of tribunals)

Legal legislation covers:

- the nature of employment contracts and agreements
- dispute-settling methods (as a result of our international agreements)
- protection of human rights in employment
- employer responsibilities for tax payments on behalf of employees
- changing community and worker expectations on social justice (equal employment
opportunity, anti-discrimination)
- safety and environmental issues
- ensuring that the government’s role in determining the details of employment contracts
would be limited to creating the legal framework → facilitated the negotiation of enterprise
agreements, the National Employment Standards, minimum wage hearings and awards

- the employment contract – common law (rights and obligations of

employers and employees), minimum employment standards,
 minimum wage rates, awards, enterprise agreements, other
employment contracts

Employment contract - a legally binding, formal agreement between employer and employee

A contact does not have to be written (recommended as disputes can occur on unclear condition
working arrangements and encourages parties to clarify key duties and responsibilities)

It is valid and legally enforceable when:

- the parties involved intend to create a legal relationship
- one party offers and the other accepts the offer
- both parties obtain a benefit
- both parties have the capacity to contract; for example, they are old enough to make the
contract
- consent is genuine and not pressured
- the offer does not contravene any public interest

Types of contracts:
1. Indefinite duration: allow employees to remain employed by the business until either
employee/employer gives notice to terminate the employment
2. Fixed term: contracts that define a date or upon completion of specific task

The common law

Common law - developed by courts and tribunals (decisions made over time by judges)

Employer obligations
● Providing work: not allowed to ‘stand down’ employees if there is no work
● Payment of income and expenses as stipulated in the award, enterprise agreement or
contract, and reimburse employees for expenses legitimately incurred

Employee rights
● Employees will work with care and responsibility, especially in respect to work H&S and
carry out their work according to their agreement/award
● Being notified according to agreement/award of an employee’s intention to take their leave
entitlements
● Meeting requirements of industrial relations legislation:
 - providing a workplace and work practices, such as equity policies and promotion that
are free from discrimination
- ensuring that workers are protected against unfair dismissal
● Duty of care - provide reasonable care for the safety of the employees by:
- providing a safe system of work, without risks to health
- providing and maintaining premises that do not unreasonably expose an employee to
risk of injury
- providing resources, information, training and supervision necessary to ensure the
health and safety of workers
- protecting workers against risks arising out of their work activities

Employee obligations
● Carry out duties in a way that is beneficial to the business
● Ensure that they maintain confidentiality
● Account for all money that comes into the business
● Take reasonable care and act safely in the workplace
● Follow written and verbal procedures and policies
● Be honest, fair and work with integrity in all dealings with both colleagues and customers
● Obey lawful commands that are considered reasonable
● Complete forms related to taxation and its deduction from income
● Give appropriate notice of termination of employment in accordance with the relevant
award

Employee rights
● Paid for all the time they work
● Receiving the minimum set out in the award or enterprise agreement
● Receiving extra pay such as loading and penalty rates
● Receive alliances for tools and uniforms
● Access to paid and unpaid leave entitlements

Minimum employment standards

10 National Employment standards have been developed in consultation with business, unions and
the community → state minimum conditions employees

1. Maximum weekly hours of work (38 hours)

 2. Requests for flexible working arrangement — parents or carers of children under 18 are
allowed to request a change in working arrangements to assist with the child’s care
3. Parental leave and related entitlements — up to 12 months unpaid leave plus a right to
request an additional 12 months unpaid leave
4. Annual leave — four weeks paid leave per year
5. Personal/carer’s leave and compassionate leave — 10 days paid personal/carer’s leave, two
days unpaid carer’s leave as required, and two days compassionate leave
6. Community service leave — unpaid leave for voluntary emergency activities and leave for
jury service (up to 10 days)
7. Long service leave
8. Public holidays — a paid day off on a public holiday, except where reasonably requested to
work
9. Notice of termination and redundancy pay — up to four weeks notice of termination (five
weeks if the employee is over 45 and has at least two years of continuous service) and up to
16 weeks redundancy pay
10. Provision of a Fair Work Information Statement

Minimum wage rates

The minimum wage rate in Australia is an employee’s base rate of pay for the number of ordinary
hours that they have worked and is generally determined by a modern award, enterprise
agreement or the national minimum wage.

Awards

Award - the legally enforceable minimum terms and conditions that apply to a business or industry

Modern awards simplify 2400 older existing awards into 122 industry or occupation based
categories → includes base pay rates, conditions and requirements, penalty rates, allowances, leave
loading, hours of work etc

Individual Flexibility Arrangements (IFA) - enable an employer and an employee to come to an

agreement that varies the modern award or enterprise agreement to address their individual
circumstances
The arrangement must not undermine minimum employee entitlements and better than the award
of enterprise agreement → only can address arrangement for work is performed (working hours),
overtime rates, penalty rates allowances, and leave loading

Enterprise agreements

Enterprise agreements - collective agreements made at a workplace level between an employer and
a group of employees about terms and conditions of employment
➔ offer broader terms and conditions than a modern award

3 types of enterprise agreements:

1. Single-enterprise agreements: made between a single employer and a group of employees
2. Multi-enterprise agreements: made between two or more employers and groups of their
employees → if they share common funding, operate collaboratively and have a common
regulatory system, such as a group of hospitals
3. Greenfields agreements: single-enterprise and multi-enterprise agreements relating to a
genuine new enterprise of the employer(s) that are made before any employees to be
covered by the agreement are employed

Features of enterprise agreements

● Outline cover rates of pay, penalty rates and overtime, allowances, hours of work, personal
and annual leave etc plus their representative organisations involved, and how the
agreement will operate
● Must be approved by the Fair Work Commission
○ Passes a better off overall test (BOOT) → each of the employees to be covered by the
agreement is better off overall than under the relevant modern award
○ Does not include any unlawful terms
○ Covers a representative group of employees
○ Has a specified nominal expiry date
○ Include a dispute settlement procedure
○ Includes a flexibility clause and a consultation clause, allowing for variations if
required

Other employment contracts

 ● Individual common law employment contracts - when an employer and an individual
employee negotiate a contract covering pay and conditions
○ For those earning over the limit of award wage → common in private sector
(wholesale trade, business service) and professional and managerial level
○ Many are informal (verbal) and offer much less protection
● Independent contractors (consultants or freelancers) - undertake work for others; however,
they do not have the same legal status as an employee
○ Undertake a contract, service or project for another business, and work for multiple
clients
○ Have a set term or specific project for their contract, control their own work and may
delegate some of their work to others
○ Covers their own superannuation, tax, insurance and leave
● Contracts for casual work
○ Contracts with employers for short- term, irregular or seasonal work → work period
may vary as they are paid on an hourly/daily basis
○ Reduces costs for recruitment dismissals and other on-costs (additional costs
involved in hiring an employee above the cost of their wages — sick leave,
superannuation, redundancy payments etc)
○ Often receive a 20–25% loading to compensate them for their lack of entitlements
and job security
○ Employed regularly for a long period of time → may be eligible for some benefits such
as superannuation and long-service leave
○ Casual employees miss out on training, experience fluctuating income, have difficulty
obtaining credit and less committed to the organisations that employ them
● Part-time contracts
○ Have a continuing employment contract and work less than 38 hours per week
○ Access to the employment entitlements offered to full-time employees on a pro rata
basis (in proportion to the % they work compared to a full-time employee)

- work health and safety and workers compensation

Work health and safety (WHS)

National Occupational Health and Safety Commission Act 1985 - introduced by Cwth gov due to
high levels of injury, accidents and disease in the workplace
Safe Work Australia — established to conduct research and develop national standards, codes of
practice and common approaches to WHS legislation → work with state governments

Under the Work Health and Safety Act 2011

● Employers must ensure the health, safety and welfare at work of all employees by providing
a safe system of work
○ ensure that plant and substances are used, handled, stored and transported safely
○ training and supervision in their work (provide necessary information)
○ maintaining the site in a safe condition
○ ensuring that the goods they design, make, supply, install or repair will not injure or
damage the health of others
● All employers must take out workers’ compensation insurance, or face imprisonment or a
$55000 fine
○ Generates funds via premiums → vary by type of industry, the amount of wages paid
to workers, the costs of any claims made by injured and the dust diseases levy
● Employers must take steps to ensure that people on-site who are not employees are not
exposed to risks arising from work being undertaken and comply with WHS requirements
● Employees who engage in bullying, skylarking or interfering with machinery or any other
behaviour that puts other employees at risk are breaching their duties and could be fined

WorkCover NSW: (a statutory body responsible for achieving safe workplaces, effective return to
work and security for injured workers)
- inspectors may inspect the workplace, collect information, and issue improvement and
prohibition notices under the Factories, Shops and Industries Act 1962 (NSW) - sometimes
mean work ceases
- must be notified of any deaths or serious injuries in the workplace, and any plans to carry
out dangerous work

Workers compensation

Workers’ compensation - provides a range of benefits to an employee suffering from an injury or

disease related to their work
➔ It is also provided to families of injured employees when the injury/disease was caused by,
or related to, their work
➔ Administered by WorkCover NSW
All employers must:
● Take out a policy with a licensed insurer
● Keep time and wages records, a register of injuries, and complete accident and internal
investigation forms, or face a penalty of $55 000 or six months jail
● Notify insurers of significant injuries within 48 hours
● Establish, in consultation with the insurer and the employee’s doctor, an injury management
plan and a return-to-work plan for all injured workers, when fit for ‘suitable duties’ Pass on
compensation monies to the person entitled as soon as possible → premiums costs are
closely linked to the number, frequency and size of claims

Injured employee may receive certain compensation depending on their situation:

● Loss wages for time off work (provisional liability payments — up to 12 weeks)
● Medical and rehabilitation expenses
● Permanent impairments or loss of part of body, permanent disablement or death → lump
sum to dependables
● Pain and suffering if the damage is assessed as being over $10k
● Generally higher payment in the first 13 weeks → incentive for worker to return to work

Matters extending this period: Formal claims for matters beyond this period or medical costs >$5k
● Serious or permanent injury, death or disablement = time limit is extended
● Eligibility for lump sum payments and the calculation of these payments under statutory law
is now based on → principle of thresholds for degree of body ‘permanent impairment’
● Workers’ payments will cease after 2.5 years, unless there is total incapacity for work →
payments will then cease for those with total incapacity after 5 years, unless there is 20%
whole person impairment

The maximum penalty for a false claim under the NSW Workers Compensation Act is $5500 or 12
months’ imprisonment, and for insurers who delay commencing payments penalties up to $50k

Common law redress

If the employee has a permanent body impairment of more than 15% and if the injury occurred at
least 6 months prior to the claim → may take action against an employer when the employer or
another employee has been negligent or breached their duty
Common law action has been taken for serious diseases such as those caused by asbestos → heard
in the district or supreme courts, and once an employee has successfully achieved a settlement,
there are no further payments. Unsuccessful = continue to receive workers’ compensation as
required under statutory law

- antidiscrimination and equal employment opportunity

Discrimination - when a policy or a practice disadvantages a person or a group of people because of

a personal characteristic that is irrelevant to the performance of the work
➔ Harassment: offending behaviour or intimidation
➔ Vilification: a public act which is discriminatory and incites hatred

Important legislation:
- Human Rights and Equal Opportunity Commission Act 1986 (Cwlth)
- Affirmative Action (Equal Employment Opportunity for Women) Act 1986 (Cwlth)
- Sex Discrimination Act 1984 (Cwlth) and the Anti-Discrimination Act 1977 (NSW)

Illegal to discriminate on: Protection on the following aspects:

- race, sex, sexual preference, age - dismissing an employee
- physical or mental disability - damaging their ability to do their job

- religious faith or political opinion - changing employee’s job to their disadvantage

- social origin or national extraction - treating one employee differently
- marital status and carer responsibilities - refusing to employ a potential employee
- pregnancy or potential pregnancy - not offering all the T+C normally in a job

Typical outcomes: Outcomes are influenced by:

- formal apology - evidence
- counselling - previous incidents
- official warnings - wishes of the person experiencing discrimination
- mediation or conciliation - severity+frequency
- disciplinary action

Strategies to eliminate discrimination:

 - writing and communicating policies to prevent discrimination and harassment, including a
code of conduct → make sure it is clearly documented and accessible to employees, offer
informal and formal options, and guarantee timely responses, confidentiality and objectivity
- training managers and staff in cultural diversity issues and ways to prevent/deal with
discrimination, using face-to-face and interactive training programs
- appointing a grievance officer and specifying grievance procedures involving issues such as
sexual/racial harassment
- regularly evaluating record keeping, implementation and effectiveness of policies, workplace
culture and action taken to resolve complaints

Equal employment opportunity

Equal employment opportunity (EEO) - equitable policies and practices in recruitment, selection,
training and promotion
➔ Ensure best person for the job with appropriate skills and abilities are chosen and positive
work environment is promoted
➔ Level of equity in a business is reflected to the extent women and minority groups have
access to different occupations and position and grievances/legal action undertaken

Employers with more than 100 employees must develop an affirmative action program (measures
taken to eliminate direct and indirect discrimination, and for implementing positive steps to
overcome the current and historical causes of lack of equal employment opportunity for women) in
consultation with employees.

Workplace Gender Equality Act (2012) aims to promote and improve gender equality and outcomes
for both women and men in the workplace

The Workplace Gender Equality Agency has been created to reflect this new focus and aims to
remove discriminatory employment barriers and take action to promote equal opportunity for
women in the workplace. It focuses on 6 areas of equity: recruitment, promotion and separation;
access to all occupations and areas; equitable total remuneration; training and career development;
work and life balance; sexual harassment and working relationships.

Achieved by:
- advising and assisting employers with the promotion of gender equality in the workplace
- reviewing compliance with the legislation
 - providing research findings and educational programs to improve gender equality outcomes
- establishing a workplace profile and analysing the issues in the specific workplace
- reporting on the actions taken by the employer to address priority issues
- describing the action plans for the following period and evaluating the strategies used

FWC includes broader provisions relating to most areas of employment → ensures no existing or
proposed award or enterprise agreement discriminates on a wide variety of grounds

To achieve gender equality in a workplace:

- provide equal pay and conditions for men and women for equal or similar work
- remove anything that prevents the full participation of women in the workforce
- facilitate access to all jobs and industries, including leadership roles

Gender equality is important as it encourages stronger applicants, especially women, entices more
highly educated (often female) applicants, reduces costs associated with staff turnover, and
encourages varied perspectives and views which results in stronger business performance

● economic

The economic cycle

- Demand for labour is determined by the demand for goods and services within the economy
- Labour shortages may develop during economic growth → employes compete by offering
higher wages → can put upward pressure on costs and prices, creating inflation
- During economic downturns, demand falls and businesses are forced to rescue the size of
their workforce and limit capacity to provide wage
- Structural change: change in the nature and pattern of production of goods and services
within an economy
- A significant growth in the level of services in an economy compared to other sectors
- Removal of protective tariffs and quotas in manufacturing → increase business
exposure to international competition → facilitate rapid technological change
- Employment is growing in service sector: property, business, retailing, trades,
tourism, educational services, hospitality, and community and personal services

Globalisation
- Globalisation: the breaking down of national barriers and the integration of many economies
into one global economy, increasing the flow of information, materials, capital and finance
 - Increased the level of international competition → restructure, relocate (to where dispute
levels, labour and regulatory costs are much lower), outsource non-core functions or
subcontract production to compete effectively
- Increasing in training in the management of multicultural workforces
- International Labour Organisation to promote trade between countries and adhere to social
justice principles

● technological

Technological advances = major source of improvements in productivity, communication and

competition between businesses
- Re-engineering and restructuring as networks, often offshore, make increasing use of ‘virtual
teams’ using video technology
- Major opportunity to access employees at home → cope with traffic congestion or distance
from business office
- Increase need for ongoing training programs and new protocols to ensure work-life balance

Further causes the nature of production and services to change, and new jobs to be created, while
others are made redundant.

● social – changing work patterns, living standards

Changing work patterns

There has been a dramatic growth in part-time and casual work due to growth in the finance, retail,
hospitality and community service industries. Work patterns are also constantly changing (labour
fragmentation). There has been a drift from full-time employment towards part-time, especially
amongst women as it offers them greater flexibility (work-life balance, additional education, easy
into retirement). Businesses also seek a more flexible workforce through casualisation of the
workforce → popular in industries like retail and hospitality

● Career flexibility and job mobility

○ Most mobile: 20-24 y/o, English speaking background, retail/hospitality industries
○ Many leave full-time positions after developing specialist skills and experience →
become independent contractors or consultants
● Increased participation rates for women
 ○ Participation rate: percentage of a given group of individuals of working age who are
employed or actively seeking work
○ Reflects changing social expectations, increased education levels, improved access to
child care and more flexible work arrangements
● Ageing of the workforce
○ Refers to the growth in the average age of the population, due to sustained low
fertility and increasing life expectancy → proportionally fewer children under 15 in
the population, and more people in older age groups
○ Can result in shortage of skills → businesses need to create incentives to encourage
staff to postpone retirement and allow for flexible working arrangements
○ Government + business need to respond by upskilling younger population, offer
targeted H+S programs, provide opportunities to update skills of the older
generation, remove discrimination in the recruitment of older workers
● Early retirement
○ Older employees are using gradual withdrawal approach to retirement
○ Result of incentives, increasing average life span, better health, employment
opportunities in physically demanding service sector, to release boredom
● Living standards
○ High living standards = OHS, regular wage increases, performance bonuses, fringe
benefits, leave and superannuation benefits
○ Undercut conditions through excessive outsourcing and casualisation of the
workforce, shifting production offshore → may be challenged by unions as casual
workers have higher levels of stress due to difficulties in obtaining loans
○ Social expectations (home, ownership, holidays, consumer goods) = workplace
participation for women especially and rising retirement age
○ Increasing income inequality - growth in real wages has lagged behind profit growth
in recent years, and the widening gap between average fe/male wages
○ Lack of work-life balance with long working hours especially for carers, electronic
communication and loss of holidays/weekends → government implemented d
legislation to make workplaces more family friendly (carer’s leave, job share, part-
time, flexible working hours)

● ethics and corporate social responsibility

Ethical business practices - those practices that are socially responsible, morally right, honourable
and fair

Socially responsible employers recognises that:

- a pleasant working environment and good working conditions are valuable in motivating
and retaining staff
- performance and motivation are maximised when staff feel secure, confident in their work,
recognised, safe, equally valued and rewarded for their efforts
- an effective workplace benefits from good working relationships and teamwork
- the business depends on community support, as a source of staff and as a source of business
- Businesses should work ethically as consumers will eventually find out the truth

Code of conduct - a statement of acceptable and unacceptable behaviours in a business

➔ Code of ethics: statement of a firm’s values and principles

Benefits of ethical and legal practices:

- Staff retention and absenteeism rates improve as staff feel more valued and motivated →
enhance business performance
- Business costs from recruitment and training reduced and costs associated with fines
- Significant marketing and business opportunities → regular publicity in the media, in
journals and on the internet and obtain community staff

Working conditions

Safe and fair working conditions improve welfare of employees are achieved through:
- Compliance with social justice and industrial legislation
- Providing a safe and healthy working environment, safe working practices and equipment,
appropriate supervision and training in safety and health
- Creating challenging, interesting and meaningful work to stimulate intrinsic rewards for staff
- improving communication, and fostering teamwork and empowerment of staff
- Providing study leave and training opportunities to reduce skills obsolescence and improve
access to management positions
- Offering conditions and open awards/benefits
- Implementing change through collaboration with staff
- Establishing a code of practice for customers, employees and suppliers → a statement of the
principles used by a business in its operations
Code of practice - a statement of the principles used by a business in its operations (generally refers
to practices that are seen as ethical or socially responsible)

Ethical issues which arise from pressure to become competitive

- Exploitation of adult workers through outworking and subcontracting locally and offshore
- Use of child labour (cheapest form of labour)

However, nowadays Businesses are sensitive to consumer concerns → due to the success of
consumer lobby groups and actions, and media scrutiny. As a result, ethical businesses have
demonstrated CSR through untaking regular audits of factories abroad, working with agencies to
support ethical practices and seeking accreditation.

Processes of human resource management

● acquisition

Acquisition - the process of attracting and recruiting the right staff for roles in a business

1) IDENTIFYING INFORMATION NEEDS

First must analyse the internal environment in regards to the goals and culture
- Goals and objectives, current business performance, corporate culture
- Technology, structure, size, rates of turnover and promotion
- Productivity levels, budget (financial capacity)
- Focus → e.g. cost containment, growth, downsizing, improved customer service or quality
- Demand for different jobs → specific skills now and in the future
- Personality that will be good fit for the organisational culture

And the external environment:

- Labour market trends (seasonal), economic conditions (impacts on sales), competition
- Technology, labour costs
- Legal, political and social factors
- Changes in industrial relations practice
Then must forecast demand (turnover, number, experience, skills, tasks need to be performed) and
supply (turnover rates, career goals, HR inventory, experience, qualifications, skills). The business
then must determine variances: shortage (increase overtime, start recruiting/outsourcing, slow
retirements, accelerate training and development) or surplus (use of casuals, encourage early
retirements, reduce work hours)

Job analysis: the process of obtaining information about jobs by determining what the duties, tasks,
or activities of jobs → information from gained from job analysis is used to create a:

Job description - a broad, general, and written statement of a specific job, based on the findings of a
job analysis
➔ Generally includes duties, purpose, responsibilities, scope, and working conditions of a job

Job specification - outlines the criteria (skills, talents, attributes, qualifications) for an applicant
capable of completing all tasks explained in the job analysis

2) RECRUITMENT

Recruitment - process of locating and attracting the right quantity and quality of staff to apply for
employment vacancies or anticipated vacancies at the right cost

Business must decide upon:

a. External recruitment: hiring workers from the general public
- Reduce disruption to workforce
- Expensive and time consuming
b. Internal recruitment: filling vacant positions by promoting current staff
- Gives employee motivation by providing them with opportunities for advancement →
but can lower morale if employee are not chosen (increase competitiveness)
- Can cause a vacancies, leading to external recruitment in the end

Business must attract potential employees to apply for the position:

● Advertisement: describes tasks, duties and responsibilities. the qualifications and skills, and
conditions (level of pay and working hours) and application details → can be placed on
newspaper, magazines, trade journals and internet sites
● Employment agencies: put people who are looking for work in touch with the business that
are hiring
 ○ Makes process more efficient as agency only recommends people who fit the
business’ requirement
○ Downfall is that agency does not know the business culture
● Headhunters: seek out people who would be appropriate for the position and approach them
with an offer (used for higher-level, specialised positions)
● Word of mouth/contacts: spread news and put in touch with potential applicants

3) SELECTION

Employee selection: gathering information about each applicant and using that information to
choose the most appropriate applicant

Screening: assess which employment is truly right for the vacant position
- Interview is commonly used where representatives of the business talk to applicants
(informal to formal) to assess their qualifications and personality
- Can include aptitude test, reference check, physical examinations and probation period

Effective employee selection involves:

- hiring qualified job applicants who are motivated and have values and goals aligned with the
business and its culture
- fair, non-discriminatory and legally compliant selection policy and process
- giving applicants a realistic understanding of their job description and responsibilities
- use tools to identify gaps in skills and recruiting strategically to fill these gaps
- using strategies that are aligned with other HR strategies and the business’s needs

● development

Development - the process of developing and improving the skills, abilities and knowledge of staff,
through induction, ongoing training and further professional development

Development focuses on enhancing the skills of the employee through:

- further professional learning
- mentoring or coaching
- performance appraisal and opportunities to advance in career

Importance of development:
- ensure that experienced and talented staff are retained
 - employees who feel competent in performing their jobs and are recognised for their
achievements are more motivated and satisfied at work, hence achieving higher levels of
commitment and performance to the business
- low turnover and absenteeism
- development needs change as an employee’s career develops

Induction - process of introducing new employees to the corporate culture, processes and their job
● Gives employees a positive attitude to the job and the business
● Builds a new employee’s confidence in the job
● Stresses the major safety policies and procedures, and explains their application
● Helps establish good working relationships with co-workers and supervisors

Benefits Costs

- Workers will become more safe - Cost of conducting induction

- Can avoid the costs (insurance premiums, - Down time
sick leave, worker’s compensation, legal - Another employee/manager is
etc) unproductive
- Can avoid problems happening - that costs - Ineffective induction = high staff turnover,
money employee feeling uncomfortable/unsure
- Reduces employee turnover

Training - process of increasing the knowledge and skills of the workforce to enable them to perform
their jobs effectively
● Aims to seek a long-term change in employees’ skills, knowledge, attitudes and behaviour in
order to improve work performance
● Focus on acquiring new skills and acknowledge: helps to adapt to change and stay ahead of
the competition
● On the job training (informal): occurs internal to the business (whilst they are performing
their duties
○ specific to the business
○ learning by doing under the supervision of a more experienced worker
○ job shadowing so that they learn by observing their colleagues
○ working as apprentices under more experienced workers
○ relatively cheap and minimises disruptions to the workplace as employees don’t need
to take time off
● Off the job training (formal): conducted away from the immediate work area
 ○ formal study, educational qualification
○ offers new perspectives and expertise that the business doesn’t have
○ more effective teaching techniques and up-to-date information
○ useful for exchanging ideas and creating networks with other businesses
○ not usually tailored to the business’ current needs → hard to see exact benefits
● Steps involved in training:
1) Assess needs of the individual (skills, knowledge, attitudes, long/short term), the job
(competencies required) and the business (culture, goals, standards, service levels)
2) Determine the objectives of the training program for the business, job and individual.
3) Consider the internal and external influences → internal = the attitude of employees
to training, staffing, and financial and physical resources available to operate the
program AND External = include any new research on relevant training issues and
government programs or support available for training
4) Determine the process: the content of the training program, the learning principles to
be applied, including participation, repetition, demonstration and feedback the
learning methods to be applied (simulation training, lectures) the location of the
training program (on-site or off-site) and the participants involved (employees,
supervisors, human resource manager, external consultants)
5) Evaluate the training program: tests and surveys (prior to/after training).
performance appraisal, observation and benchmarking of key indicators

Advantages Disadvantages

- More likely to feel more - More likely to demand higher wage

satisfied/motivated/confident and stay - May be approached/scouted by other
at bs employers
- May encourage employees to stay and
find paths for progression
- More productive - decrease costs

Organisational development
● Team and project based structures replacing hierarchical organisation structure → develop
shared ideas → improve employee autonomy, efficiency, effectiveness and response to
customer needs but also reduce promotional opportunities
● Strategies instead to motivate and retain employees
○ Job enlargement: increasing the breadth of tasks in a job
 ○ Job rotation (multi skilling)
○ Job enrichment: increasing the responsibilities of a staff member
○ Job sharing: two people share the same job
○ Self-managing teams: roles and decisions are determined by team members
○ Mentoring and coaching: more experienced staff member provides advice and
support to another person developing skills in the area

Mentoring and coaching

● Mentoring - the process whereby a manager or senior employee offers his or her knowledge,
wisdom, and advice to someone with less experience
○ a mutually agreed role (suits experienced staff keen to transfer knowledge and skills
through succession planning)
○ more focused on building a personal relationship that encompasses the life
experience of both parties
○ Often mentees select their mentors and are free to accept or reject the advice offered
○ Develops a more personal relationship with no time frame
● Coaching - a training method in which a more experienced or skilled individual provides an
employee with advice and guidance intended to help develop the individual's skills,
performance and career
○ performance enhancement by building skills and capabilities, overcoming
weaknesses, resolving specific issues → helping individuals manage specific work
roles more effectively
○ provided by the business/sought by those seeking further development
○ specific to the employee’s work function and is aimed to improve performance and
productivity
● Experienced staff transfer knowledge and skills through succession planning

Difference Mentoring Coaching

Focus Individual life development, preparation Performance enhancement by building

for future roles skills and capabilities, overcoming
weaknesses, resolving specific issues

Role Facilitator, guide, based on sharing Specific to employee’s work function

advice and experience
Assists employee in setting goals and
Personal relationship, more like a friend finding solutions
 Function Provide advice that may assist in Share skills, knowledge, styles and
improving the way someone manages techniques that are relevant to employee
issues and situations needs

Time No time frame Specific time frame

Frame

Structure Unstructured More structured

Benefits Individual: through personal growth, Business: through improved teamwork,

potential improvement in performance performance and productivity

Enhances morale May enhance morale

Performance appraisal - process of assessing the performance of an employee, generally against a

set of criteria or standards
● Main objectives:
1) Provide feedback from management to employees regarding work performance
2) Act as a measurement against which promotion and pay rises can be determined
3) Help the business monitor its employee selection
4) Identify employees’ training and development needs
● Evaluate employee performance for strengths, weaknesses and opportunities for
development
● Assess an employee’s suitability for promotion and their potential value to the business’s
success
● Employees continually perform below expectations → recruitment and selection process
may need to be changed, and extra training and development may be required
● Advice and opportunities provided to employee for them to improve over a fixed time frame
→ discussing it with the employee makes the process more constructive and fair, making it a
more useful experience (more likely to value the performance appraisal)

● maintenance

Maintenance - the process of managing the needs of staff for health and safety, industrial relations
and legal responsibilities, including compensation and benefits, of all staff

● Focuses on the processes needed to → retain staff and manage their wellbeing at work
● Maximising staff wellbeing:
○ encouraging staff to participate in decision making
 ○ giving employees some control over their work lives (eg. flexible job roles, flexible
working hours, family friendly programs
● Safety and health
● Managing communications effectively
● Complying with industrial agreements and legal responsibilities

Communication and workplace culture

● Poor communication = conflict and high turnover rates
● Methods of communication: regular team meetings, staff bulletins and newsletters; staff
seminars; social functions; suggestion boxes and staff surveys; and email and intranet
● Technological advancements may be source of misunderstanding/tension → if protocols are
not established for constructive communications and timelines for feedback
● Different expectations of staff in attending to communication can lead to conflicts → e.g. staff
attending to emails at home
● Some business redesign layout to create central locations for breaks and meetings

Employee participation

Participation Strategy Explanation

Participation through - Allows a senior/employee to represent staff on the board

membership of the board of - Presents conflicts of interest for the employee, who often becomes
directors alienated from other employees

Participation through - Employees buy shares in their company → increased commitment

ownership - However, different objectives may lead to a conflict of interest,
particularly as ownership increases in scale

Joint consultative - Formally established groups consisting of employees and

committees management representatives, may include union representatives
- Original purpose
Aka: Works Committees - To provide mgt with the views of employees on a range
of issues
- Enhance communication
- Improve efficiency and productivity
- In NSW, mandatory for larger workplaces for work health and
safety

Participation in collective - Requirement that a majority of employees be involved in

bargaining developing an enterprise agreement
- Advantage = under good faith bargaining principles - all parties are
required to make an effort to resolve issues through negotiation
and conciliation
 - Ensures that employers/ees have clear opportunities to learn from
each other’s experience and to negotiate outcomes beneficial for
both groups

Team briefings - Excellent opportunity for employees to share knowledge, skills and
experience
- Find solutions to problems and develop innovations

Employee surveys and - Surveys/reports from staff → to seek valued feedback on ways to
feedback from performance improve business performance
interviews

Benefits
● Monetary: superannuation, paid training opportunities, health insurance, subsidised gym
membership, housing and company car
● Non-monetary
○ Flexible and family friendly work arrangements through work at home, extended
maternity leave, reserved child care, arrangements to check children, flexible hours,
family leave, job sharing
○ Allow employees to balance work and family responsibilities → retain staff, reducing
separation, recruitment and training costs for new employees and create a positive
image in the community
○ Effective in retaining staff in long term as business recognies interdependence of
work and family life, reduce problems involved in managing family responsibilities
and create a positive image of the firm
● May cause fringe benefits tax (FBT): a tax employer must pay on certain benefits they
provide to their employees or their employees’ associates, such as a family member

Legal compliance and corporate social responsibility

● HR policies must comply with existing legislation, including anti-discrimination and sex
discrimination legislation, occupational health and safety, taxation, social justice legislation,
and industrial relations legislation and agreements
● Employee wellbeing and retention: creating a workplace where staff treat each other in a
respectful, professional, fair and considerate manner
● Bullying and sexual harassment = major causes of stress → lead to absenteeism, high
turnover, low productivity, low morale, high stress levels
 ● Ways to minimise bullying (common to vulnerable employees like apprentices, young staff,
casuals or migrant workers)
○ providing information about workplace bullying
○ inducting and training employees in company policy, procedures to deal with
bullying, and consequences of bullying
○ providing training to increase cultural awareness
○ promoting a culture that is based on open communication, respect, fairness and trust
○ ensuring management is committed to resolving bullying and grievances
○ having mentoring or buddy systems for new and young employees
○ having a member of staff, appointed by the staff, to handle complaints and grievances

● separation

Separation - the process of employees leaving voluntarily, or through dismissal or retrenchment

processes

Voluntary: Involuntary:
● Resignation ● Contract expiry
● Relocation ● Retrenchment
● Voluntary redundancy ● Dismissal
● Retirement

Retrenchment - employees lose their jobs because industry is closed

Redundancy - when an employee’s position is no longer required
● Closure of the workplace site, completion of the employee’s project, lack of contracts or
orders for work, a downturn in demand from customers or a need to reduce staff due to
financial difficulties in the business
● Reasons for redundancy: organisation restructuring, technological advancements, downturn
● Documentary evidence for redundancy:
○ written statement confirming termination and date of termination
○ employee’s job is no longer needed
○ no appropriate work was available elsewhere within organisation
○ employees was consulted about redeployment options in the business
● Length of service, performance, future potential and leaving voluntarily should be
considered
 ● Managers should consult with staff prior to termination and support them to ensure a
smooth transition that do not affect remaining employee’s morale
● Amount of notice, pay in lieu and severance pay is outlined in most awards and agreement
● As a result of lack of work, as in the case of a fall in demand for a product or service, or the
position may have been restructured or replaced by technology

Dismissal - the termination of employment by an employer against the will of an employee

● Summary dismissal: an instant form of dismissal that applies to employees involved in
gross or serious misconduct
● Termination of misconduct must be fair and reasonable as determined by Fair Work
Commission
● Can occur due to poor performance, business are required to:
○ give employees a warning about their poor performance over a period of time
○ give them advice and support so they have opportunity to improve
○ notify employees of the reason of termination and an opportunity to respond

Unfair dismissal
● Occurs when the FWC finds that: the employee was dismissed, the dismissal was harsh,
unjust or unreasonable and the dismissal was not a case of genuine redundancy
● Employees can claim unfair dismissal if the business has >15 employees who have been
employed for over 6 months
● Resolved through informal conferences, telephone conferences or by a formal hearing
● Compensation may be ordered → cap of 6 months pay
● Employer has right to object if it was not submitted in an appropriate time frame, not a case
of unfair dismissal or if the person is not eligible
● Can create poor business image and is a length and expensive process → avoid the risk by
hiring casuals and contracts or tightening employment contacts with probationary periods
and measurable targets to allow for dismissal or consulting specialists in area of termination

Strategies in human resource management

● leadership style

Leadership style - ways that managers communicate with their employees to inspire and motivate
them to work together to achieve an organisation’s goals
 ● Determined by type of organisation, corporate culture and produce being produced
● Influences workers motivation, the way decisions are made and corporate culture
● Difference between leadership and management
○ Leadership: act of establishing direction, purpose and the necessary capabilities
among a group of ppl → qualities: vision, ability to influence, bring people together
○ Management: focus on productivity, setting objectives, coordinating activities and
reviewing performance → organising resources to achieve aims and objectives

Autocratic leadership
- Make decisions without input from staff
- Usually worker’s compliance is recognised through financial reward

Advantages Disadvantages

- Compliance = financial reward → good drive - Inflexibility can lead to high absenteeism
for some individuals and staff turnover
- Works well with unskilled/inexperienced - Transactional style - lower job satisfaction
workers → work is highly organised and - Demotivating, disempowering
controlled - Risky if manager is not good
- Works well when leaders need to make - Management gets stressed, has all
difficult decisions with no consultation responsibility
- Good during crisis

Participative/democratic leadership
- Consultative approach between managers and workers
- Australians encourage this leadership style

Advantages Disadvantages

- Encourages workers to be engaged in the decision- - Not good for unskilled,

making process unmotivated workers
- Transformational leadership: managers have higher - Long decision making process
expectations of workers → higher levels of engagement - Blame shifting
- Greater ownership of the final decision → result in higher - May appear
job satisfaction and productivity uncertain/indecisive -
- Works well when emphasis is on higher quality output authority may be questioned
rather than efficiency - Not suitable in times of crisis
- Addresses the role of motivation, conflict and - May never reach true
relationships → workers are seen as a resource that can consensus
be developed over time - Can sometimes encourage
 - Can solve complex problems (diverse set of ideas) procrastination/laziness
- Encourages trust and respect

Laissez Faire - workers have a lot of control over ideas and decisions

Advantages Disadvantages

- Highly skilled workers may be highly - All but the most talented/independent
motivated workers may take adv of this style → may
- Talented/creative workers may come up not do it if there is no punishment
with original solutions (SCA)

● job design – general or specific tasks

Job design - the number, kind and variety of tasks that a worker is expected to carry out in the course
of performing their job

Specific approach/scientific management approach: one way of doing a job, worker skills
should be matched to the job requirements, based on specialised efficient process that often uses
low-skilled, cheap labour

Generic approach: as a result of job enlargement (horizontal expansion of the job by adding
similar level responsibilities) → expanded to incorporate a more general approach with a greater
variety of tasks to be performed by workers with its main objective being to improve worker
engagement and satisfaction

Common elements of a well designed job to motivate employees:

- autonomy - clear task identity - receive feedback
- well trained - feel competent - social interaction
- flexibility - resources - challenge

● recruitment – internal or external, general or specific skills

Sources and methods used for recruitment depend on:

- recruitment goals and policies of the business → e.g. preference for internal recruitment
- the conditions of the labour market,
- the location of the business
 - the financial or other resources of the business
- and the specifications of the job to be filled

Poor selection process = increased costs, lower productivity

- Training costs (if poorly qualified staff are selected)
- Job doesn't meet expectations = job dissatisfaction, lower performance, industrial
unrest/labour turnover
- Feel inadequate for the job/business or feel excessive work pressure = absenteeism
- Accident or defect rates, fines if inappropriate/untrained staff are selected
- Claims of discrimination if the process is not undertaken appropriately

Internal recruitment: filling job vacancies with people from within the business
● Employees, former applicants and former employees
● Invited through intranet postings, staff records, promotion lists, word of mouth, email,
employee referrals

Advantages Disadvantages

- Motivation for staff → see development - Can reinforce negative culture

opportunity - Can lead to rivalry for positions
- Builds commitment/loyalty - Need established framework for training
- Business only needs to hire at base level and merit-based appraisal system
- Employees know culture/operations - - Often attracts a significant number of
maintain productivity internal applicants, need to manage
- Can lead to succession of promotion unsuccessful applicants who will be
opportunities with succession planning demotivated, can lead to poor working
- Recognises and rewards staff for effort and relationships
achievement - Little value added, no new skills
- Cheaper - To a higher position or different position
- Less chance of a failure (staff are observed can create vacancy in workplace → need to
in operation, strengths and weaknesses are undergo external recruitment
known)
- Allows position to be filled immediately

External recruitment: filling job vacancies with people from outside the business
● Obtained traditional methods such as newspaper advertisements, online advertisements and
referrals through recruitment agencies, company websites, trade unions, trade shows,
management networks, professional associations, schools, radio and television.
 Advantages Disadvantages

- Wider applicant pool - Risk of unknown staff

- New ideas, perspectives and skills may - Lost productivity in initial phases of
produce better solutions to business issues orientation and induction phase
- Get specific skills needed, save on training - May not fit with culture
- Dilutes internal politics - May not be accepted by internal rivals
- More diversity in employment - Takes lot of effort and time → background
- Builds organisational ‘brand’ through check and contact with referees needed
publicity - Risk of legal claims
- Can shape new employees to the business - May demotivate existing employees

General or specific skills

General skills
- Include flexibility and versatility, social confidence, positive attitude, motivation, and the
ability to work as a team and/or independently
- Behavioural ‘soft’ skills → often critical in building a successful workforce
- Not really ‘learned’, whereas specific skills can be taught
- Important as many jobs today require individuals to work independently and undertake
many different tasks
- Value these skills → indicate that the employee has a capacity and willingness to learn

Specific skills
- Highly specialised and are required for some jobs within STEM
- Many businesses recruit overseas or using outsourcing and overseas recruitment to
overcome skill gaps
- Significant shortage in more highly skilled and professional areas
- Employee poaching: practice of enticing employees to work for another business → used
because highly skilled and professional areas are low in numbers and companies do not
invest enough in training and developing their workforce

● training and development – current or future skills

Training - aims to develop skills, knowledge and attitudes that lead to superior work performance
➔ Crucial due to significant labour market problems → a shortage of skilled labour, and a
mismatch between what skills are needed and what is available
Development - enhancing the skills of the employee in line with the changing and future needs of the
organisation
➔ Encourages employees to take advantage of opportunities to develop a career with the
business
➔ Business benefits by retaining the employee’s experience and knowledge of the business

Choosing nature of T&D → business evaluate needs of the business, supply of skills, demand for
skills and changing nature of work

Shift to service based economy has caused many traditional skills become obsolete → consider
these options:
- Invest in further in-house training and development
- Recruit staff for specific skills
- Retain experts who retire on part-time basis
- retain women through flexible work structures such as part-time work
- Share staff with other firms, or do work for other firms (insourcing - delegating a job to
someone within the business, as opposed to someone outside the business)
- Outsource functions to specialist firms or agencies, even overseas
- Sponsor overseas migrants for areas of major shortages
- Build networks or alliances with other firms with specialist skills

● performance management – developmental or administrative

Performance management - addresses both individual and business performance. Successful

individual performance will often translate into the business’s strategic objectives being met
➔ Includes job design, recruiting best staff, training and development and rewards

Performance appraisal and management systems can be designed to meet the two following
purposes for a business:
● Developmental model: improves individual performance through establishing objectives
that are consistent with achieving the organisation’s goals
○ Using data to develop the individual skills and abilities of employees → improve their
effectiveness in their roles, overcome weaknesses and are prepared for promotion
○ Best achieved through empathetic and goal focused year round periodic feedback and
shared discussion
 ○ Creation of a shared vision of the strategic direction of the business between
employees and employers, the establishment of performance objectives and a formal
review process → ensure staff remain motivated
● Administrative model: assesses the progress of the business in meeting its strategic goals
and where necessary identifying the areas for improvement → establishing new goals or
employee performance
○ Provides information, often following an annual appraisal
○ Focus = collecting data to manage the HRM function more efficiently and ensure that
individual and business goals are aligned and strategic goals are met

Developmental benefits Administrative benefits

- Assists with human resource planning - Higher productivity

- Can plan to overcome gaps or weaknesses - Better financial performance
found in performance - Comparison of contribution to organisation
- Shows the effectiveness of current selection and performance against agreed standards
processes and whether staff recruited - Helps assess rewards and benefits linked to
match the cultural fit and skills required for performance
the organisation - Builds self-efficacy as contributions
- Identifies training and development or legal recognised — important in motivation and
compliance needs retention
- Evaluates rewards and benefits programs - Identifies strengths and weaknesses,
- Communicates expectations, helps build creating opportunities for training and
trust, promotes long-term organisational development, coaching or mentoring
development. - Creates opportunity for employees to
- Helps identify, motivate and retain talented provide feedback
staff for leadership succession - Initiative recognised and rewarded
- Identifies and documents poor - Fosters promotion on merit
performance, and links it with training and - Employee focus is aligned with
improvement strategies organisational strategy
- Helps build best practice culture

● rewards – monetary and non-monetary, individual or group, performance

pay

Aim of reward = motivate staff and be equitable

- Clearly communicated → simple to understand and administer
- Defensible, cost effective
 - Relevant, integrated with the corporate strategy
- Consistently applied to all employees

Businesses use reward policies to attract, motivate and retain employees → reinforce strategies to
facilitate change, support desirable corporate values

MONETARY AND NON-MONETARY

Monetary rewards - rewards reflected in pay or having financial value

- Direct: base pay, incentive pay, allowances
- Indirect: insurance, superannuation, childcare, flexible work, holidays

Non-monetary rewards - rewards that do not have a financial value

- Job: interesting work, challenge, responsibility, recognition, advancement, performance
feedback
- Flexible work schedules
- Interest in employee (personally/professionally)
- Education opportunities (formal/informal, T&D)
- Recognition (formally and informally)
- Clear communication systems
- Equity among employees
- Environment: good HR policies and practices, competent supervision, congenial colleagues,
safe and healthy work environment, fair treatment, opportunities for learning and
development, open communication, career security

Remuneration - both the financial and non-financial benefits that employees receive in return for
their work effort

INDIVIDUAL OR GROUP REWARD

Rewards for individual performance can lead to conflict and rivalry → individuals should be
dependent on others to achieve high-quality performance → use gain-sharing plans and group
incentive schemes to support a team-based culture

Gain-sharing plan - involves the benefits of improvements and success being reflected in rewards for
teams (cash bonuses, shares etc.)
➔ Encourages cooperation between employees but can create ‘free-rider’ phenomena: team
member who contributes little to overall performance but receives the reward nevertheless
Key issues to consider in designing a reward and benefits system for business:
- Business strategy → including profitability/viability of the business
- Rewards and benefits of competitors
- Organisational objectives of reward
- Union power
- Relevant awards and agreements, minimum employment standards
- Economic conditions — supply and demand for labour; skills shortage

Key issues to consider when designing a reward and benefits system for individual employees:
- Performance pay: distributing rewards according to individual employee performance →
increases individual accountability and promotes employee development
- Performance related: incentive plans for performance above standards or criteria, bonuses,
piece rates, commissions, production-related incentives
- Job relate: role and level of responsibility, scope of supervision, base pay, interpersonal
skills, knowledge and skills, experience, value to the company
- Other individual considerations: group incentives, the employee’s values (e.g. job flexibility)
specific job conditions and their individual bargaining power

Biased/unclear/unfair reward systems can lead to internal politicking and conflict, loss of trust and
motivation and higher levels of labour turnover

● global – costs, skills, supply

Increased competition, technological advancements, outsourcing brought about by globalisation →

change in management of HR due to high domestic labour costs, skills shortage, small labour pool →
especially as AUS has high living standards (better wages/salaries) and increasing superannuation
costs

Ways business increase competitiveness:

- Subsidiary - a company that is owned by another company (parent) and it is often located in
another country → take advantage of the opportunity to reduce production costs and gain
access to new markets
- Restructure workforce → outsourcing to other countries to produce goods at a cheaper price
and/or with abundant highly qualified workers
Australia currently has a skills shortage due to a poor education system and employees prefer
importing cheaper labour → Government aims to overcome through the use of temporary work
visas (work permit that allows skilled migrants to come to Australia and work for an approved
business that sponsors them for a period of up to 4 years. Applies to occupations where Australian
workers cannot be found) → criticism because 100k Australian workers lose to business migration
(especially to China and India)

● workplace disputes

Disputes - conflicts, disagreements or dissatisfaction between individuals and/or groups

➔ Can lead to higher levels of absenteeism, low productivity, legal claims and high staff
turnover

Industrial dispute - a disagreement over an issue or group of issues between an employer and its
employees, which results in employees ceasing work
➔ Strikes: situations in which workers withdraw their labour → most overt form of industrial
action and aim to attract publicity and support for the employees’ case
➔ Lockouts: when employers close the entrance to a workplace and refuse admission to the
workers → used to promote concession bargaining, to push employees to sign individual
agreements, and in response to strike action → used against pickets: protests that take place
outside the workplace, generally associated with a strike

Major causes of disputes:

● Remuneration: wages, allowances, entitlements and superannuation.
● Employment conditions: working hours, leave, benefits etc
● Job security issues: retrenchment, downsizing, restructuring, use of contractors, outsourcing,
re-classification of the workforce
● Matters outside agreements
○ OHS: physical working conditions, safety matters, and workers’ compensation
provisions, protective clothing and equipment, uncomfortable working conditions,
employee amenities, equipment condition, and overly strenuous physical tasks
○ Managerial policy: decisions and policies of line managers → disciplinary matters,
suspensions, discrimination, principle of promotion, decisions and policies of line
managers, production limits/quotas
○ Union issue: employer approaches to union, recognition of union activities
 ○ Political/social protects

- resolution – negotiation, mediation, grievance procedures,

involvement of courts and tribunals

Key stakeholders involved in resolving disputes:

Employees Employers
- use grievance procedures - use grievance procedures
- negotiate agreements with employers, - negotiate agreements with employees to
with/without unions resolve disputes
- collective or individual basis

Trade Unions Employer Associations

- represent employees in disputes (shop floor - provide information and support to
to national level) employers
- negotiate with management, employers and - assist in negotiations with unions, represent
associations employers in tribunals
- represent employees in tribunals

Governments Industrial tribunals; Fair Work Commission

- provide institutions, policy and legislative - interpret legislation
framework for the resolution of conflict - make/supervise awards and agreements
- investigate breaches of legislation - provide conciliation and arbitration (for
resolution of disputes/unfair dismissal
claims)

Civil courts (Federal Court, State Supreme Human Rights Commission (federal)
courts) - monitors and reviews how legislation
- enforce legislation relating to human rights is implemented
- handle common law actions - investigate/conciliate complaints about
discrimination in employment
opportunities or a person’s treatment in the
workplace
- refers complaints of sex discrimination in
awards and agreements for determination
to the Federal Court

Anti-discrimination boards (state)

- work closely with the Australian Human Rights Commission (AHRC) and Workplace Gender
Equality Agency to ensure disputes about discrimination are resolved through → provision of
information, investigation and conciliation
- can refer cases to Administrative Review Tribunal for determination
- review discrimination in the workplace on basis of → age, colour, sex, disability, criminal
 record, political opinion, race or religion

3 processes of dispute resolution:

1. Negotiated outcome: the parties work out the solution for themselves
2. Mediated outcome: an independent mediator assists with the development of an agreement
3. Arbitrated/adjudicated agreement: an independent arbitrator or court determines how the
matter will be resolved and makes a legally binding order

Before taking industrial action, there must be proof that both parties have attempted to bargain in
good faith (parties meet regularly with a willingness to reach an agreement)

NEGOTIATION

Negotiation - a method of resolving disputes when discussions between the parties result in a
compromise and a formal or informal agreement

Advantages Disadvantages

- Increase knowledge of: company policy, - No binding solutions

business objectives, workers concerns and - Power imbalance
issues involved in implementing change - Parties may be entering negotiations in bad
- Clear misunderstanding → improve working faith
relationships - Voluntary = parties may leave anytime
- Free, private - Not all issues are negotiable → differing
values or ideologies
-
MEDIATION

Mediation - the confidential discussion of issues in a non-threatening environment, in the presence of

a neutral, objective third party

Advantages Disadvantages

- Empowering by resolving own disputes - Mediator unaware of corporate culture +

- Reduces the risk of disputes escalating, employees
leading to expensive legal costs or industrial - May not come to conclusion
action - No legally binding decision
- Reduces power imbalance - Either party can withdraw at any time
- Nature of it encourages talk and dialogue
- Non threatening environment
GRIEVANCE PROCEDURE

Grievance procedures - formal procedures, generally written into an award or agreement, that state
agreed processes to resolve disputes in the workplace

- Most business have established a formal process stated in agreements by which issues can
be handled
- Common issues include personality conflicts, allowances and pay, discipline, changes being
implemented that will affect/cause conflict between staff
- Effective grievance procedures
- Require full description of the complaint made by employee
- Person the grievance is made against should be given details of the allegation and an
opportunity to provide their views

Advantages Disadvantages

- Reducing the risk of an issue rapidly - May not cover all situations
becoming a serious dispute
- Processes are transparent

Typical procedure (following each step, the issue can be resolved, if not, move on to next step)
1. Employee and/or representative present complaint to supervisor
2. Complaint is handled by middle management in meeting with employee and/or
representative
3. Meeting of employee and/or representative with top management representative and/or
grievance committee
4. Matter referred to external conciliation or arbitration by parties involved

INVOLVEMENT OF COURTS AND TRIBUNALS

Usually occur when disputes have passed their nominal expiry date, bargaining has commenced
towards a new agreement, and negotiations have failed

Conciliation - process where a third party is involved in helping two other parties reach an agreement
- Refers to FWC who appoints a conciliation member to hear both sides of the dispute
- Conciliation member calls a conference and attempts to help both sides reach an agreement
 - May tell all parties to continue negotiations, reduce the ambit of the dispute or develop other
strategies to resolve the dispute
- Continue negotiations, reduce ambit of dispute or develop other strategies and report back
for another conference

Arbitration - process where a third party hears both sides of a dispute and makes a legally binding
decision to resolve the dispute
- Member or a panel hears both sides of the dispute in a more formal, court-like setting
- Order (decisions that require employees or employers to carry out a direction from the
tribunals → may be inserted in awards/agreements) is handed down based on evidence and
becomes legally binding
- FWC may order staff be reinstated or that the parties return to the tribunal at a later date for
further negotiations

Common law action

- Open to any party involved in or affected by industrial action
- Parties may make direct claims for damages caused by the parties taking the action, or for
breach of contract
- Employer can state/supreme court for an injunction or stop order to prevent unlawful
interference with employer’s business
- Costly → used as a last resort
- Available to those on individual common law contracts disputing matters not covered in
legislation or relevant awards

Effectiveness of human resource management

● indicators

Performance management - a strategic approach to improving organisational effectiveness and

success, through improving the performance of the business, teams and individual employees

Indicators - performance measures used to evaluate organisational or individual effectiveness

➔ Benchmarking - a process in which indicators are used to compare business performance
between internal sections of a business or between businesses
➔ Used as a basis for improvements
 ➔ Gathered and collated in human resource audits - diagnostic tool used to evaluate HR
policies and practices in order to identify problems and develop solutions in an attempt to
rectify problems

Role of HR manager in using indicators on fostering continuous improvement by:

- communicating and educating employees about company vision, strategy and
- expectations at an operational level
- planning and setting goals for employees that are translated into meaningful tasks, and
ensuring staff know how to achieve them
- developing employees effectively to improve performance
- evaluating performance, providing coaching and feedback in formal reviews
- linking rewards to performance measures
- providing organisational feedback for ongoing planning purposes

- corporate culture

Corporate culture - the values, ideas, expectations and beliefs shared by members of the business

Effective workplace relations depend heavily on the quality of a business’s communications systems
and participation of employees in decision making

Characteristics of a business with outstanding corporate culture:

- Better work and employment relationships
- Dedicated, trained and motivated employees
- Employees treated fairly and honestly, trusted and work is appreciated
- Positive reinforcement, constructive criticism, harmonious atmosphere
- Conflicts dealt with sensitively and appropriately
- Feeling part of the team and involvement gives feeling of self-worth

Strategies to build a good workplace culture:

- High quality personal relationships
- Creative perks (health and training)
- Flexible and family friendly practices
- High levels of training and mentoring
- Culture of trust: transparency, impartiality and equality
- Collaboration across all levels and involvement in decision making
 - Fun atmosphere
- Pay more than basic rates and some share options

Potential issues: difficult to measure quantitatively, highly subjective and management may have
differing views of the realities of their workplaces

- benchmarking key variables

Purpose of benchmarking is to compare a business’s performance in specific areas against other

similar business/division or best practice business → initiate changes to foster improvement

4 ways to undertake benchmarking → approach chosen is based on its suitability to the business’s
needs and resources as it is a costly and time-consuming process
1. Informal benchmarking: Includes any strategies such as networking through informal
discussions with colleagues in other businesses, undertaking visits to other businesses,
researching best practice online and attending conferences
2. Performance benchmarking: involves comparing the performance levels of a
process/activity with other businesses
3. Best practice benchmarking: involves comparing performance levels with those of another
best practice business in specific areas using a structured process to gain skills and
knowledge and to modify organisational processes.
4. Balanced scorecard benchmarking: measuring whether the activities of a business are
meeting its objectives established in the strategic plan

Advantages Disadvantages

- Qualitative information - more insight - Costly and time consuming

- Provides useful information about HR - May focus on costs rather than what is
actually being/may be achieved

Human resource audits

● Used to systematically analyse and evaluate human resource activities and their
effectiveness
● Performed through:
○ Performance of one division/business itself benchmarked and compared to industry
‘best practice’ to determine areas of weakness and for improvement
○ Outside consultant conducts research to analyse problems and suggest solutions
 ○ Key performance variables are evaluated by management
○ Legal compliance analysis may be undertaken to determine areas of variance from
laws and company policies
○ Management by objectives (MBO) approach used to determine areas of poor
performance against targets established

Quantitative measures
● Demonstrate the actual effect of indicators in economic terms
● Key variables
○ Variances in labour budgets: significant increases = increase costs → likely due to
poor planning of staffing needs, higher unscheduled absenteeism, overtime or staff
turnover rates, or increases in wage rates
○ Time lost/costs of injuries and sickness: shows that OHS requirements are being
breached → may be due to poor training or a lack of training → lead to higher
insurance premiums, risks of fines and claims
○ Performance appraisals completed compared with targets: indicates the extent to
which the appraisal of staff has been undertaken by managers, but does not provide
detailed feedback on the effectiveness of these processes
○ Percentage of goals achieved: goals to be collaboratively determined by employees
and managers e.g. dollar sales per employee
○ Levels of labour turnover: higher levels = workplace problems

Qualitative evaluation
● Involves detailed feedback and research on key issues → allows judgements to be made
about changes in behaviour or quality of service provided
● Include feedback from middle management, surveys and focus groups about workplace
culture, relationships at work, and the quality of customer service and leadership and
research by external businesses and institutions
● Major variables
○ High absenteeism and labour turnover rates = problems including boredom, poor
relationships, and lack of training or opportunities to develop
○ Analysis of industrial disputes and the issues raised may provide useful feedback
about issues
 ○ Feedback from performance appraisals: useful in evaluating and planning training,
recruitment and selection, development, rewards, and separation processes
○ Feedback from supervisors, consultative committees, customers and employees in
organisational surveys provides useful insight into worker satisfaction,
empowerment and customer service

- changes in staff turnover

Staff turnover - the loss of employees by a business who leave for a variety of reason
➔ occur due to pull factors outside the business (new opportunities or promotion) or push
factors inside the business

In assessing the significance of turnover, it is important for businesses:

- to benchmark their turnover against that of other businesses in the industry
- to determine the type of staff leaving and their reasons (eg. seek new
opportunities/promotion as a result of skills developed in a particular industry, or due to
‘toxic’ workplace riddled with internal politics)
- determine the economic cycle → turnover flutates
- understand turnover rates varies between industries → high in hospitality and hotel
industry

Reasons for high staff turnover Disadvantages of high staff turnover

- Poor leadership and - Cost: payout for entitlements, hiring, inducting and
management → low morale training new staff
- Lack of T&D - Lose talented/skilled staff to competitors
- Few opportunities for career - Loss of productivity - downtime while replacements are
progression being found
- Ineffective recruitment and - Loss of experienced workers
selection procedure leading to - Negative impact on reputation → won't attract potential
inappropriate workers being candidates
appointed - Loss of morale
- Poor working conditions - Loss of productivity and service quality, corporate skills
- Poor communication and knowledge particularly if there has been poor
succession planning

However, some level of turnover is considered healthy in businesses → new ideas are brought in
and often stimulate innovation in work practices
 - absenteeism

Absenteeism - a worker who neglects to turn up for work when they were scheduled to do so

High levels of absenteeism and/or lateness = workers are dissatisfied or that there is conflict within
the workplace → poor employer-employee relationship, poor leadership etc

Firms with high absentee levels need to have much higher staffing levels → revenue is lost as work
is disrupted and can lead to lower productivity and higher labour costs

- accidents

Accidents - unintentional and unexpected incidents of physical and mental harm to an employee in
their work environment
● Employees most likely to experience an injury: young males engaged in physical work,
tradespeople, labourers and transport workers and women in hospitality and health related
services
● Most fatalities are associated with road crashes, and injuries are associated with lifting,
pushing and pulling objects, or being hit by an object

Benchmarked internationally through:

● Lost Time Injury Frequency Rates (LTIFRs): an event that results in a fatality, permanent
disability or time of one day/shift or more lost from work
○ Number of lost-time injuries per million hours worked
○ Number of lost injuries x 1 000 000 / Total hours worked in accounting period
● Safe Work Australia rates based on accepted workers’ compensation claims that involved the
loss of one or more working weeks (serious claims)

Best practice businesses:

- Have regular safety audits and comprehensive safety programs, and use data to improve
- Build a culture of safety → communicate effectively about OHS using visible policy
statements, safety signs and reminders
- Provide careful induction and regular ongoing training for staff to ensure they are aware of
safety rules and prepared for emergencies
- Consult employees and health and safety personnel on the implications of changes in the
workplace
As a result businesses save on compensation claims, absenteeism, lost work time, replacement costs
for damaged equipment, and loss of morale in the workplace → also can improve business image as
customers also appreciate the effort businesses make in producing a safer product/service

A challenge of this is that it is a quantitative measure → may not reveal the causes/nature of the
accidents and their implications for the business

- levels of disputation

Levels of disputation - the number of disagreements and issues between an employer and employee
or between employees, suggesting issues regarding the nature of workplace relationships and
management of workers

Overt manifestations Covert manifestations

By employees By employers By employees By employers

- pickets - lockouts - absenteeism - discrimination

- strikes - stand-downs - high labour - harassment
- stop-work - dismissals, turnover rates - lack of cooperation
meetings retrenchments - theft and sabotage - exclusion from
- work bans and - higher defect rates decision making
boycott - reduced
- work-to-rule productivity
- lack of cooperation

Indicators of industrial disputations:

- Work bans: ban or boycott = refusal to work overtime, handle a product, piece of equipment,
process, or even a refusal to work with particular individuals → green ban = refusal to carry
out work that is considered harmful to the environment or natural resources
- Work-to-rule: employees refuse to perform any duties additional to the work they normally
are required to perform
- Go slow: employees work at a slower rate than normal, causing customer complaints, and an
expensive backlog of work to be caught up at a later date
- Sabotage: vandalism, cyber attacks and internal theft are not uncommon → employees taking
action to harm or destroy the image of a firm

High number of formal grievances = poor quality relationships in the workplace → can be damaging
if they attract media attention or move through the legal system → business should undergo careful
investigation to indicate whether these issues relate to the policies and processes in the business or
specific to individuals who may need further T&D or formal counselling

Issue with the indicator is that some disputes are covert → go unnoticed (tension, absenteeism) and
its quantitative nature makes it difficult to judge severity of each dispute

- worker satisfaction

Worker satisfaction - the extent to which employees are content with their jobs.
➔ Key factor in employee commitment, job performance and staff turnover

Undertaken using: Such surveys can be used to improve:

- paper surveys - management style and processes
- online polls - benefits and rewards systems
- focus groups - the physical working environment
- external consultants - employee relationships
- data from performance feedback + exit - other employee needs
interviews

Ways to improve workers satisfaction:

- Effective leadership: when employees feel recognised and encouraged → management is
transparent, promotion is merit based, and communication is honest and respectful
- Matching the purpose of the business with the skills and cultural fit of the employee
- Family-friendly culture
- Adequate breaks during the day
- Workplace wellbeing strategies such as a gym
- Rewards for effort and performance
- Opportunities for sabbaticals or ‘leave’ options
- Ongoing training and mentoring/coaching to provide support for emerging leaders